Factors That Influence the Level of Underground Government

Abstract

Bennett and DiLorenzo have called the rapidly rising levels of off-budget spending "underground government," which they viewed as an end-run around voter-enacted limitations on spending, taxation, and debt. Marlow and Joulfaian argue that high levels of off-budget spending occur for the same reasons as high levels of on-budget spending. In this article, state data are used to develop two econometric models of off-budget spending. The models are used to test the hypotheses of Bennett and DiLorenzo, and Marlow and Joulfaian, and to develop new ones. Many of the significant variables have not been included in any previous models, and some of them have policy-making implications.